STAAR Surgical (STAA): Yunqi Capital Opposes Alcon Deal, Citing Flawed Go-Shop and Poor Board Oversight

December 10, 2025

Dear Fellow STAAR Shareholders:

We are writing to share with you our continued opposition to the proposed transaction. After reviewing the announcements by STAAR and Alcon regarding the course and closing of the 30-day go-shop period, and Alcon’s revised offer of $30.75 per share, we remain opposed to the merger even at the increased price and will continue to vote our shares AGAINST it.

We strongly believe that it is still not the right time to sell the Company – regardless of the outcome of the go-shop period. We held this view before the go-shop was initiated, as we communicated to shareholders and to the Board on several occasions. We held this view during the go-shop period, although we chose not to publicly express that view during the period so as not to prejudice the process. And we continue to hold this view now that the go-shop has concluded and predictably produced no additional proposal.

We also believe that STAAR has mismanaged its attempt to sell the Company from the start; that the go-shop process was structured and conducted to seal the Alcon deal rather than to genuinely seek additional offers; and that the Company has not been fully transparent with shareholders, including in its most recent press release. With these views in mind, we are even more resolved to vote against the proposed merger, even at the revised price.

There may come a time when a board of STAAR should sell the Company, but now is not the right time, and the current Board is not the right board for the job, having lost credibility with shareholders in our view.

We also reject the assertion by Alcon in its latest press release dated December 9 that we are “activist shareholders.” We are a long-term shareholder in STAAR, with a 5.1% stake and a wealth of insight on the Company’s business and long-term prospects, and we are speaking out against Alcon’s attempted takeover of the Company for less than fair value.

The Go-Shop Period Could Never Remedy the Fundamental Issue: STAAR Should Not Be for Sale Now

Shareholders such as ourselves did not oppose the proposed merger at $28 per share because we preferred a different buyer or a marginally higher price from Alcon such as $30.75. We opposed it because STAAR is at a strategic inflection and rebound point. As we have discussed before – and we know other shareholders heard us – excess distributor inventory that pressured results beginning in 2023 is gradually normalizing. Demand indicators in China’s refractive market have begun to improve following last year’s slowdown. Recent quarterly results issued by the Company itself reflect sequential operational momentum and cost discipline progress. The business appears to be turning the corner – precisely as the Board is attempting to sell it.

We have no reason to believe that this trajectory has changed in the last 30 days.

Seeking alternative bidders during a compressed 30-day period could not solve the problem that the Company should not be for sale now. If a materially superior offer had emerged, we would have reconsidered our position. But, as we expected, the structure of this process made such an outcome improbable, and no such offer emerged.

The Go-Shop Was Structured to Seal the Alcon Deal

The structural issues in the go-shop were evident from the outset.

A 30-day period is too short to support a meaningful market check for a company with STAAR’s global distribution footprint, regulatory complexity, and manufacturing profile. Any credible strategic or financial acquirer would require time to analyze regulatory conditions across multiple jurisdictions, assess pricing dynamics in key markets, conduct due-diligence on manufacturing, supply chain, and growth forecasts, coordinate consortium or financing partners, and obtain board or investment-committee approvals.

Moreover, under the merger agreement amendment enabling the go-shop, Alcon was contractually entitled to receive all additional non-public information provided to any potential bidder within one business day, and retained the ability to review any superior proposal from an alternative bidder for four business days following the go-shop period. These provisions were likely to discourage alternative bidders.

Broadwood Partners accurately described STAAR as “utterly disingenuous” in touting the point that Alcon had “agreed to give up any matching rights during the go-shop period,” when Alcon had retained its right to review any superior proposal from an alternative bidder for four business days following the go-shop period before the Board could move ahead with the alternative proposal. The Company’s wording appears intended to portray Alcon as having a hands-off role in the process – when the opposite was true.

If STAAR’s Board had been committed to seeking fair value and maximizing shareholder value, it would have allowed the current agreement to terminate and, at the appropriate time and from a position of strength, initiated a disciplined strategic alternatives review with a full market canvass – rather than a constrained process that favored Alcon.

The Go-Shop Was Then Conducted to Seal the Alcon Deal

STAAR’s implementation of the go-shop further suggests to us that the process was designed primarily to secure the Alcon transaction.

The Company states it engaged with 21 third parties. In our view, there are far more than 21 potentially interested strategic and financial parties globally.

STAAR further disclosed that only two parties signed NDAs. However, Broadwood stated on December 9 that at least one additional credible buyer, with the capital, industry expertise, and interest to acquire STAAR at a higher price, was told it must sign a multi-year standstill to access diligence materials. Broadwood has indicated that other parties received similarly restrictive demands.

STAAR has not addressed these facts or described the terms of the proposed NDAs it offered, or whether such terms may have deterred discussions with credible bidders.

The Company also declined in its most recent press release to address the respective roles of management and the Board in managing and overseeing the go-shop outreach. Did the Board know that management was imposing NDAs with multi-year standstills on potential bidders and did they recognize these terms may have been deterring credible parties from engaging? Did the Board and management discuss potentially adjusting these terms to encourage diligence at any level?

Shareholders have no information on these questions and it is unclear whether the Board exercised meaningful oversight of a process that directly impacts shareholder value at a critical moment. Based on the limited information provided, the NDA terms appear to us to have served to discourage interested bidders.

Now Is Not the Right Time To Sell, and the Revised Offer Is Insufficient

We agree with Broadwood Partners that the absence of competing proposals does not “validate” the go-shop process – contrary to the Company’s assertions. In our assessment, similar to that of Broadwood Partners, the process was structured in a way that all but ensured no credible bidder would participate. A credible acquirer would be, at best, reluctant to enter into a process where Alcon enjoyed a significant timing advantage, access to substantially more information, the effective right to match any alternative offer, and long-standing ties to STAAR’s leadership – especially given that Alcon itself assigned a valuation to the Company roughly double the current offer less than a year ago.

We also reject arguments made by STAAR and Alcon to the effect that a price of $30.75 offers a “generous” premium. We take note of Alcon’s observation that its revised offer price now represents a 74% premium to STAAR’s 90-day volume-weighted average price (VWAP) and a 66% premium to the closing price of STAAR common stock on August 4, 2025.

But, as we have also noted before, we struggle to understand how the Board can genuinely view the stated premium as compelling for shareholders, given that business cycles clearly impacting the Company last substantially longer than 90 or even 180 days. In prior earnings disclosures, the Company consistently acknowledged working through cyclical challenges, such as excess inventory and macroeconomic trends in China. Most recently, STAAR’s third quarter results show there is solid and accelerating demand for its ICL technology in China and globally, and they indicate that the challenges of the past year reflect temporary headwinds, not structural weaknesses.

It was never the Company’s expectation, prior to the merger announcement, that these challenges and other headwinds would be resolved within one, two or even three quarters. Although a 74% premium to a 90-day VWAP may appear compelling when viewed in isolation, this figure is being presented without the fuller context of the Company’s long-term trajectory – context the Company itself has emphasized many times.

We will continue to vote our shares AGAINST the amended merger agreement and urge all shareholders to do the same.

Sincerely,

Christopher M. Wang
Founder and Chief Investment Officer
Yunqi Capital Limited

Source: https://www.sec.gov/Archives/edgar/data/718937/000121390025120340/ea026892701-exh_staar.htm